Exclusive: Holiday shoppers to spend less

By IBT Staff Reporter On 09/12/11 AT 2:16 PM

Most than a quarter of Americans expect to spend less during the holidays this year, a survey showed on Monday in an early sign that retailers will have to try harder to win shoppers in the biggest selling season of the year.

The findings underscore the fragility of the U.S. recovery, since consumer spending accounts for almost 70 percent of the nation's economy.

About 27 percent of people surveyed by America's Research Group said they planned to spend less this year, while about 55 percent expects to spend only as much as last year.

The question was one of several asked exclusively for Reuters as part of a larger America's Research Group survey.

More than half of those surveyed said they expected the economy to slow further before it recovers. About 51 percent said they did not feel better about their family finances than they did a year earlier.

Retailers better be worried about Christmas, America's Research Group President Britt Beemer said in an interview. If half of Americans believe it is going to be worse before it gets better, they may not be too excited about buying much this Christmas season.

Only about 18 percent of Americans plan to spend more this holiday season, down from 23 percent last year, in a worrying sign ahead of a period when some U.S. retailers make as much as a third of their annual sales.

This is not the kind of number that retailers want to have going into November 1 or they are going to be in big trouble, Beemer said. They are going to have to give consumers better deals earlier.

Fewer pay raises, falling home values, rising prices for food and other goods, and political gridlock in Washington are all taking a toll on Americans, Beemer said.

Not that there is no hope at the end of the tunnel, but the light is very, very dim, he said.

Post-recession American shoppers are extremely sensitive to price and continue to chase bargains, according to both the shopper survey and recent data on credit card spending.

Heavy back-to-school promotions pushed credit card spending up in August, figures from U.S. payment processing company First Data Corp show.

The unit of private equity firm Kohlberg Kravis Roberts & Co found overall dollar volume rose 9 percent in August from a year earlier, but the average purchase increased only 0.3 percent.

In August, consumers were drawn to stores by aggressive back-to-school promotions, said Silvio Tavares, senior vice president and division manager of First Data Information and Analytics Solutions. These sales increased overall card spending despite lower average prices.

Budget-conscious shoppers are also venturing beyond discount chains while hunting for bargains, the America's Research Group survey showed.

About 68 percent of those surveyed said they had started shopping at dollar stores, and 42 percent said dollar stores offered better value than discounter Wal-Mart Stores Inc.

That is also bad news for other mass merchandisers such as Target Corp and even Family Dollar Stores Inc and Dollar General Corp, which despite their names also sell goods priced above $1.

Anybody who is another discounter that sells commodities is vulnerable, Beemer said. Dollar stores are attacking them at their lowest price level.

The telephone survey of 1,000 consumers took place was conducted September 6-8 and has an error factor of plus or minus 3.8 percentage points.

(Reporting by Dhanya Skariachan; editing by John Wallace and Lisa Von Ahn)